Windows Phone 7 at a Crossroads

This week sees the Windows Phone Marketplace hitting a new milestone: 11,000 apps published. While this is an important moment for developers of Windows Phone apps, it is also perhaps a good time to ask a question that affects the future roadmap of the marketplace and, in turn, its prospects for driving revenue for independent developers over the next few years: what sort of WP7 apps are being written?

The picture above is a section of the 16th century Lenox Globe, famous among other things for the lexical note hic sunt drancones, “here there be dragons.” Windows Phone, being neither fish nor fowl, has the potential to be either a device for high-end apps with, ultimately, limited reach like the iPhone, or alternatively a wild-west platform loaded with free but ultimately ungainly apps, like the Droid platform.

Moreover, the quality of the current applications in the WP marketplace will affect which way WP7 goes. The direction WP7 heads in, in turn, will affect whether the user-base for WP7 grows, attracting more developers to the WP7 platform, growing the user-base, etc. … and bringing in more revenue for the early adopters of WP7 as a development platform.

Ideally, we would all like Windows Phone to have the reach of the Droid platform but the quality of the iPhone app store.

As things currently stand, however, WP7 developers may be headed in another more dangerous direction – toward having poor quality apps as well as limited reach. There are two major hurdles that must be overcome in order to avoid such a sad outcome, and the initiative has to come from developers rather than from Microsoft. First, WP7 must become a platform for designers as well as developers. Second, WP7 developers must be willing to defer immediate gratification and avoid ad-funded apps.

The Problem with Metro

Metro is in many ways a beautiful design language. It is also, sadly, a horribly misunderstood design language. From the original inspiration in train station iconography and sci-fi movies like The Minority Report , the Metro language has become embodied and calcified in the default controls and styles: black and white and blocky. This is obviously a boon to developers who do not have to think too hard about what their apps are going to look like, and fulfills Microsoft’s promise that WP7 will be the most developer friendly phone platform.

Apps using the default style look nice enough. The problem here is that black, white and blocky apps don’t look like they are worth paying 99 cents for – and people in fact aren’t paying the 99 cents or even more that developers are trying to charge for these apps.

What kind of apps do make money? First, games built on XNA (and which consequently don’t use the Metro style at all) make money. The biggest excitement in the marketplace at the moment is the news that Angry Birds and Plants vs Zombies are coming to the platform.

What other kind of apps do well? One of the most popular talks at the upcoming MIX conference is by Andras Velvart and his designer Balint Orosz on how they created Cocktail Flow ($2.99) which, in their words, is “one of the most beautiful apps out there.” You don’t have to see the session to know what they did right, though. It’s the simple fact that there was actually a designer involved. Most apps in the marketplace are written without any sort of designer input and it shows.

It is time to come to terms with the fact that Metro is more than black, white, blocky and Segoe WP. The UX for the Zune is also Metro – and in fact the original Metro in many ways. Bing, in its own way, is also Metro. The Picture Gallery, Office, and other built-in WP7 apps are also Metro. Those are the things developers need to start taking inspiration from.

Once that clicks, then hopefully developers will begin to realize that they need to be working with designers – and if they aren’t they shouldn’t expect to have successful apps.

In my opinion, getting UX is going to have to be the responsibility of us, the developers. This entails understanding our own limitations as well as the limitations of Microsoft.

Microsoft as a software company will never get UX. Whenever they look at an app, they just want to add more features. This is an engineering frame of mind – more features is always better for an engineer. The heart of “getting UX” – an overused phrase, sadly – is that less features presented beautifully is the true key to success.

This is not to say Microsoft doesn’t have good UX people. It’s just to say that those people don’t steer the ship. If you have any doubt about this, compare a web search of Brandon Watson – director over the WP7 developer platform – and one of Albert Shum — the lead designer for WP7 and of the Metro style. Who has more influence? Who would you like to hear more from?

The Problem with Ads

Not everyone sees things this way, of course. When developers notice that no one is buying their apps, they go for the easiest solution. Rather than improve their apps, developers are instead trying to give them away for free with ads.

Microsoft’s original pitch to developers was “Your apps are worth more than 99 cents”. As things turn out, however, we are quickly racing to the bottom with ad-funded apps. Is this the way to go?

Ads are currently the way most successful Droid developers are making money. Paid apps, on the other hand, are the norm for successful iPhone apps.

For the long term health of the WP7 marketplace, we ought to follow the iPhone model. The problem is that the current reach of the Windows Phone isn’t big enough for WP7 developers to make a lot of money off of paid apps. The only people doing so are those who are being funded by Microsoft to port their apps to WP7 (i.e., like, I assume, the above mentioned Angry Birds and Plants vs Zombies).

So what are we to do while we wait for the marketplace to grow? Many people are proposing ads as the right way to get ads into the marketplace. Current rough estimates are that an ad-based app (one in which the developer is paid for impressions rather than clicks) can bring in about a thousand dollars a month for the first few months. There are caveats, however. This will only be true for the first few months, as a free app will quickly reach its saturation point. Additionally, this will also only be true if you are one of the top 100 or so apps.

This is good enough that some WP7 developers can actually quit their day jobs. Assuming they can get ten apps into the marketplace and that they can get a new app out every two months or so, an enterprising developer can make a good, if not a great, living building WP7 apps fulltime. See Elbert Perez’s story: http://www.occasionalgamer.com/

A million dollars isn’t cool. You know what’s cool? A billion dollars.

For the sake of argument, let’s say the top 100 apps in the WP7 marketplace make an average of a thousand dollars a month (these numbers are purely speculative, of course, and shouldn’t be taken for anything more than a thought experiment). That’s roughly a hundred thousand dollars a month or, approximately, a million dollars a year. Is that the sort of marketplace we ultimately want?

Elbert Perez is without a doubt living the dream – he’s got a plan to make a modestly good living doing something he loves.

Most WP7 developers, however, are simply moonlighting and hoping to bring in, say, $5000 extra a year. Their best shot at doing this is to push out ad-based apps. Like domain squatting, it’s a strategy that will definitely make them some modest scratch. In the process, however, we end up with the equivalent of a lot of misleading sites on the web that, on occasion, can be rather annoying.

An alternative strategy is proposed by Alan Mendelevich, another prominent Windows Phone developer. For Alan (or at least the way I understand his post) this is not the time to start cashing in on Windows Phone development. This is the time to build good apps, give them away for free (free as in beer, not free as in ad-funded) in order to build a solid brand and a good reputation.

The gain in this, for all of us, is that the marketplace will grow in a healthy way. Those who have been building WP7 apps for a long time and have strong reputations for good apps will be in a position to take advantage of a strong marketplace. Those who have made a quick profit on tricking you into clicking on ads accidentally will (in a perfect world) suffer from poor reputations.

If the majority of developers follow this strategy, we can avoid the danger of having a crappy marketplace in a year’s time. Instead, we can spend the time between, say, now and the Mango release attracting designers into the Windows Phone ecosystem and, in the end, all be much better off than if we all cashed in now.

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9 thoughts on “Windows Phone 7 at a Crossroads”

Very thought-provoking post, but I think a few of the premises are wrong.

First, I’m not sure the Apple store is the epitome of high-quality apps; the iOS users I know characterize the iOS app store as a vast wasteland of worthless apps, intermixed with a few good ones.

iOS also caters to a different crowd than Android. Apple users are notoriously snooty about design, and they’re used to paying a premium for software that works on MacOS. Windows and Linux users have much more free software available, so they’re less inclined to pay for apps (I’d argue). I’d also wager they’d trade design for more features in a lot of cases, too. Windows Phone will never win a lot of iPhone users, for the simple reason that it’s not an Apple product and is therefore inferior, so devs should consider the buying habits of the rest of the planet.

Finally, I don’t see what path you’re recommending beyond the Mango update. If developers publish free apps now, how are they supposed to monetize them later? Slap a price tag on the app once people are used to getting it for nothing?

While your post is well written and makes some valid points it ultimately portrays a utopian world. A world that is not natural, and is artifically generated or imagined.

I have two games in the marketplace, one that is free, as in beer as you say. It is a ‘Lite’ version of its Trial/Pay brother, it gives the user 50% of the features of the full one and its Top 50 in Ireland, and Germany. While the free version sustained ~200-300 downloads a day for nearly two months, it now is doing about ~50-100 downloads a day.

In contrast its Trial/Pay brother (the trial is 100% identical to the ‘lite’ version), does about 1/100th of that. It gets about 1-4 downloads a day, with a Trial conversion rate at about 45%.

For the second game I decided to release it completely free, with an Ad to support it. Keep in mind Microsoft Ad’s only monetize for United States users. It has made the same exact amount of money my Paid app made in 4 months in 1 month. Not a single user rated me down for the ad, it also falls back to AdDuplex for any non-US country. I wish I could say good things about AdDuplex but I have seen VERY low click through rates for my app from that platform. The idea is awesome, but it doesn’t appear to be helping me in any noticeable way.

The interesting thing is all of my games are VERY high quality. I have very good Photoshop skills and designer skills. I spent a very large amount of time on the design of these apps. The star rating on all of them is 4+ yet I still make nothing on them.

Right now the Windows Phone marketplace is pointless to try to monetize on unless you get in the top 100. Its all about discoverability, and Microsoft does the least out of iPhone and Android to promote non top 100 applications. Apple does the most by far, with sub-categories that are filterable by Free, Paid, Gross and then Genius recommendations, and emails to recommend apps to you, etc. Android just completely revamped their marketplace to better promote apps and its working great! Microsoft needs to work VERY VERY hard on this but right now the situation is very bad.

Thank you for your very thoughtful and enlightening comments. You have both certainly found the weak spot in my argument and it will take me a bit of work to rebuild it after you’ve torn in down so thoroughly. I’m not even sure I will be able to since what I’m trying to do is to make a moral case that devs should give apps away for free by using a pragmatic economic argument — which, all things considered, is bound to be about as successful as an NPR funddrive. If you’ll indulge me, however, I’m going to give it a try anyways.

First, there are certainly lots of crappy looking apps in the iPhone store. Unlike the two competing markets we are concerned with, though, it also manages to maintain an overall high level of design quality — much higher than either the droid or WP7 are currently able to.

This is important because, as even Apple marketing managed to realize, the success of the iPhone is not due to the design of the device (as good as it is) but rather to the quality of their store. Apps sell the phone; the phone doesn’t sell apps.

I know I’m preaching to the quire, here, but a phone platform is completely dependent on a strong marketplace — and not the other way around. A strong marketplace, in turn, is not strictly an economic phenomenon. It is a social one. The Apple store succeeds because Apple has managed to sell the social concept that you don’t build great apps in order to make money. Instead, you make money _while_ you are building great apps.

It’s definitely utopian. It also happens to work, as it forces an army of designers and developers to put aside their immediate interests in order to build something amazing.

The result of this social engineering is a more successful iPhone which in turn has tranformed the industry and forced two lumbering giants, Google and Microsoft, to decide that they have to go all in with smartphone devices.

As Windows Phone developers, we have the advantage of not going in blind. We can see where the iPhone store succeeded and emulate that.

The big successes as I see it — and as I point out in the above post — is that Apple has great looking apps with high design values (not all of their apps, granted, but certainly enough of them) and that it has managed to support an environment in which paid apps rule the day.

Along with this, I’ll simply make the bald assertion that ad-supported apps are tawdry. A developer cheapens his vision by throwing an add on top of his app. You are certainly free to assert the aesthetic virtues of the ad or, more realistically, the visual neutrality of an ad and we’ll just have to agree to disagree about that.

If you grant me this premise — which admittedly may be wrong — then you’ll also need to oblige me by granting that a marketplace that is cheap and tawdry will dissuade people from buying the Windows Phone rather than attract them. A phone platform that doesn’t grow its base will cost us all in the long run.

There are millions to be made in developing for the Windows Phone. I believe this strongly. But it can only happen if the marketplace is allowed to flourish and become something great.

And here comes the most difficult part of my argument. Windows Phone developers need to invest in design and, also as important, give up the opportunity for quick money by throwing an ad onto their apps. Instead, take the next few months and put out free-as-beer apps. Use the opportunity to hone your skills as Silverlight/XNA developers. Figure out the design story for the windows phone. Work on that million dollar idea instead of lots of hundred dollar ideas. Most importantly, develop a brand with a reputation for quality and support for the marketplace. Become known as a good citizen and take a gamble that this will pay off when the marketplace is strong enough to support paid apps.

On the other hand, of course, I have no right to ask developers to not make money for their investment of time — and that’s the crux of the dilemma. Even if we all agree that an ad-free marketplace will help Windows Phone to grow, what does it really hurt for one developer to skim a little off the top. It’s only a problem if every developer does the same and — philosophically — it has always been a myth in ethics that what one person does can affect the behavior of people in the agregate. "What if everyone did it" is not a legitimate reason for any individual person not to do _it_.

So, while I think I know where I want the Windows Phone marketplace to go, you’ve also both raised good reasons why we realistically can’t get there. What frustrates me is that somehow Apple did and I don’t completely understand why Microsoft and it’s developers cannot.

This is a great post, and a great read. As someone who has tried both paid and unpaid apps across 8 different apps I have thought about a lot of these same topics as well.

The article makes a lot of sense, but in the end I must disagree with the suggestion that running ads via AdDuplex, or avoiding ads will have any measurable effect on the marketplace ecosystem. The problems with the marketplace are as you stated in the begriming of your article – that the marketplace is too small.

One comment that stuck out to me was:
"When developers notice that no one is buying their apps, they go for the easiest solution. Rather than improve their apps, developers are instead trying to give them away for free with ads."

I think that comment is being way too general. You can make the best looking app in the marketplace and still not make any money (currently) compared to what you can make via ad revenue. Suggesting that putting in ads is a quick way to make money instead of making your app better is a bit misleading. Perhaps making the app better and waiting a year for the marketplace to get better would be a more complete statement. Sure Cocktail Flow is a great example of a paid app which has gotten rave reviews – but it hasn’t made a lot of money despite the large amount of word of mouth support it has gotten. Alpha Jax and Krashlander are both good examples of great apps on the marketplace that weren’t free – and they both just created free ad-based versions, because there just isn’t anyone paying for apps.

The folks who are making money with ad-based apps are the ones writing good quality apps – crappy ad-based apps don’t make any money. I don’t look down on them at all for trying to get paid for their efforts. If it weren’t for possible monitization to encourage their efforts, then they probably wouldn’t invest as much time into the platform to try and create great apps – which would be just as dangerous to the marketplace as all the garbage apps that are being published everyday (ads or no ads).

In the end, when the market ultimately grows (or doesn’t) apps with ads will be forced to drop them to stay competitive, and until then users of the system are willing to deal with ads so long as the app is quality. If someone wants to write a great app that makes no money and is ad free with the hopes that the market will eventually pay out larger returns, then more power to them – but I doubt they will bust their butt many times over waiting for that to happen.

I really enjoyed this blog entry, please keep up the WP7 commentary, it is nice to read something about a marketplace which we both obviously would love to have succeed.

I thoroughly agree with SmartyP. WP7 is still in its infancy, and comparisons with the iPhone AppStore don’t hold water, as the AppStore was essentially launched in a vacuum. People were charging $5 and $10 for an app because everyone’s frame of reference was pricy desktop apps. WP7 is launching into a more mature market where users already have a set of expectations about what apps should cost.

If you look at the top selling/top downloaded apps in Apple’s store, you don’t see a lot of support for the "build a beautiful, rich app and they will come" thesis. Most of the top iPhone apps are either games, utility-oriented (like an enhanced camera app), or else apps by top-tier companies like Netflix or Facebook.

Still, just about all of them are priced at $.99. And there are lots and lots of popular ad-supported apps in the AppStore.